When an organisation becomes bigger over time, it needs to have systemic ways of engaging the different functions each individual staff. That is why we have policy and manuals. This helps to ensure a proper way of doing things and also how each department communicates with each other.
While many organisations tend to focus on technical competencies and software that improve performance, most of them tend to neglect one of the most overlooked components of a structure that governs the behavior of the organization, its Core Values. Some companies call it principles, beliefs or philosophy of values. This in my opinion is a strong binding adhesive that will hold the company together and also determines how each department or colleague will communicate with each other.
People don't tend to remember their company core values. It's because these values tend to have zero meaning to them. They tend to be reserved for management talk, where department heads talk about once in a while during speeches but is not usually translated down to the operational level. In fact, most organisations hire for competency, rather than for core values. They are not able to see the link of how core values can add to the bottom line of their organisation.
Core values are important. Without values, there are no clear guiding principles to how people will base their decision making process. When that happens, decisions are made based on what they feel is right. This is also pretty much subjective compared to the kind of staff your company has.
If you have a group of colleagues that place a high value on maximising profits, all their decisions will be made to support that value that they hold on to. Alternatively, if you have another group of colleagues that places a high value on environmental sustainability, your company might be spending a lot of your efforts and time in ensuring that your work will reduce the waste generated and impact to your environment.
However, if you put these two groups of people together with a different set of values together, what do you think will happen? Decision-making might be slowed. Arguments might arise because of differing values. One side might want to maximise profits at the cost of the environment, while the other side wants to reduce profits by taking care of it.
Therefore, it is important for an organisation to be clear of its values. To let it be a binding force that will help everyone in it to make the right decision in the face of differing views. Values should be clear and must give clear principles to make the right decision. This is even more important especially when situations are dire and difficult decisions have to made.
Being clear about your core values is sometimes a challenge. Being consistent in following through with them even when it threatens your financial success is even a bigger challenge.
Let's examine a case study on Johnson and Johnson's Tylenol crisis and what we can learn from it.
Case Study- Johnson & Johnson's Tylenol Crisis
In 1982, Johnson & Johnson's Tylenol, the leading painkiller medicine in the United States commanded a 35% of the over-the-counter analgesic market share. It contributed almost 19% to the company's profit during the first three quarters of 1982. In October 1982, seven people in Chicago were reported dead after taking extra-strength Tylenol capsules, and a widespread panic ensued about how widespread the contamination might be. It was reported that one individual succeeded in lacing 65 grams of the deadly cyanide into Tylenol capsules, 10,000 times more than what is needed to kill a man. Immediately after the incidents, the company's market value fell by $1 billion dollars.
Suddenly, with no warning, Johnson & Johnson found itself with dilemma of the best way to deal with the problem without destroying the reputation of the company and its most profitable product. James Burke, the chairman of Johnson & Johnson at that time, reacted to the negative media coverage by forming a seven-member strategy team immediately, and their strategy guidance from Burke was first "How do we protect the people?" and second "How do we save this product".
Although the company knew they were not responsible for the tampering of the product, they assumed responsibility by ensuring public safety first and recalled all of their capsules from the market. They alerted consumers across the whole nation not to consume any type of Tylenol product, which is about 31 million bottles and a loss of more than $100 million dollars ( Lazare, Chicago Sun-Times 2002 ). In fact, when similar incident happened in 1986, Johnson & Johnson immediately removed all capsules from the market permanently until the company done something to provide a better product protection. The cost was a high one.
However, the company quickly won praise for its swift and appropriate action. Along with nationwide recall and alert, Johnson & Johnson established relations with the Chicago Police, the FBI, and the Food and Drug Administration, which allowed them to play a part in searching for the suspect and preventing further tampering. The company was given much positive coverage for their handling of this crisis.
After the crisis, Johnson & Johnson unleashed an extensive marketing and promotional program to bring Tylenol back to its number one position. Burke said: "It will take time, it will take money, and it will be very difficult; but we consider it a moral imperative". Within five months of the disaster, the company had recovered almost 70% of its market share for the drug - and the fact this went on to improve over time showed that the company succeeded in preserving the long term value of the brand. In fact there was some evidence that some consumers who were so reassured by the steps taken by the company, they switched from other painkillers to Tylenol.
The reason Tylenol reacted so quickly and in such a positive manner stems from the company's mission statement - a credo written by Robert Wood Johnson in 1940s. He stated that the company's responsibilities were to the consumers and medical professionals using its products, employees, the community's where its people work and live, and its stockholders. Johnson & Johnson's responsibility to the public proved to be its most efficient public relations tool. They have showed themselves to be prepared to bear the short term cost in the name of consumer safety, and this has undoubtedly established a strong trust relationship with their customers - which became the key to the brand's survival.
From the example of Johnson and Johnson, we can derive that making principled decisions based on your values can actually yield financial success and high trust among your customers.
Values should be something that all leaders should consistently share about in their daily decision-making. It is something that must be caught, rather than taught.
Recruiting people based on values
In my work with companies, there are some of them who also make hiring decisions based on values. This is interesting as most companies basically just make their decisions based on what I mentioned earlier, skills and knowledge. They view that skills and knowledge can always be learnt, however, having a staff that is aligned with their corporate values is indeed difficult to find.
In the book "Good to Great", the companies listed as going from good to great have a common attribute, that is they are consistently disciplined in waiting the right person to come aboard their company. They do not hire people when there is an urgent need for a replacement but are willing to wait, even for many months, for the right person to come along.
Should 'profits' be a part of your core values?
Before you start thinking that values have got nothing to do with earning money and profits, let me assure you that profitability and sustainability is important as well. Unless you are a charity or non-profit organisation, most companies are called companies because they exist to serve a need and also make money in the process. There is absolutely nothing serving people and earning money from it (or even tons of money from it).
In some companies that I work with, I usually observe what their core values are. If there is no hint of earning profits as one of their core values, I might question the importance of the values of the company.
In one group of companies that I worked with, I talked to the Group Director and found out that their core values meant little to them. This is because profitability was not one of their values. When most of the time they are talking about an important value that is not listed down onto their values statement, I start to question what is the relevance of the other values. She confessed that the values were there simply because it was a 'company' thing to do and that business consultants constantly asked them to include them. Is this common in your company?
What would you do?
1. You realised that some of things you need to do are not consistent with your core values. What will you do?
2. If one of your core values is to create mutually beneficial relationships. However, your project has overrun its deadlines and incurred cost along the way. Your boss asks you to 'squeeze' your suppliers by asking them to reduce their claims to you. What will you do?
3. How will you help a new colleague understand your company's values? What if they say that its only management talk and is not people to everyday living?
4. How do you hire a person who exhibits the values of your company? What kind of questions will you ask?
ACTION STEPS:
1. Get your team to start memorising the core values of your company. Seek to find relevance in making decisions based on your company's core values.
2. Make your core values practical in your work. Find linkages on situations that happened in your country and ask your colleagues what should have been done using the framework of your core values.
3. Ask your colleagues whether do they see you demonstrate the core values of your company at work? Do they see you living up to it?
NOTE: If you strongly feel that everyone in your organisation needs to live by its Core Values, do ask how Deep Impact can help you to make a impact in creating highly experiential activities that will help them to remember them.
Kenneth Kwan is an International Speaker and has traveled to six different countries speaking to thousands of clients on Mindset and Attitudes shift as well as Building Teams. You can get your free report of "7 Transformational Secrets to Creating a Dynamic and Cohesive Team in your workplace" from http://www.DeepImpactOnline.com/blog
